Judgment Title: Ronbow Management Company Ltd -v- Sorohan Builders Ltd & Ors Composition of Court: Judgment by: Laffoy J. Status of Judgment: Approved |
Neutral Citation Number: [2010] IEHC 60 THE HIGH COURT 2007 2511 P BETWEEN RONBOW MANAGEMENT COMPANY LIMITED PLAINTIFF AND
SOROHAN BUILDERS LIMITED, JOSEPH SOROHAN, JOSEPH BOWE, CLAIRE M. CALLANAN, NIALL COLEMAN, MAIRE CUNNINGHAM, JOHN W. CUNNINGHAM, GABRIEL C. DALY, AISLING B. FOLEY, AISLING C. GANNON, AINSLEY P. HEFFERNAN, MARK J. HESLIN, RICHARD LIDDY, AIDAN C. MARSH, KATE A. O’CONNOR, MAITIU O’DONAILL, SHAUN G. O’SHEA, MARK PERRY-KNOX-GORE, IMELDA REYNOLDS, GARY RICE, PHILIP HOWARD SMITH, JOHN C. WHITE, CARRYING ON PRACTICE UNDER THE STYLE AND TITLE OF BEAUCHAMPS SOLICITORS, BRYAN O’ROURKE, AND PETER MORRISSEY CARRYING ON PRACTICE UNDER THE STYLE AND TITLE OF PETER MORRISSEY & COMPANY, SOLICITORS. DEFENDANTS Judgment of Miss Justice Laffoy delivered on the 5th day of February, 2010.
Factual background Two documents are at the core of the plaintiff’s claim in these proceedings. The first is an agreement, which is headed Management Company Agreement, made on the 30th April, 2001 between the first and second defendants, as vendors, and “Ronbow Limited”, as purchaser. Although it is probably of no significance, I note that the Management Company Agreement pre-dated the incorporation of the plaintiff and that the company named as purchaser does not bear the name of the plaintiff. After reciting that the first defendant proposed to develop the lands delineated on the map annexed thereto and surrounded by a thick black line as Elton Court (which was referred to as “the Estate”) by the erection of 37 townhouses and car parking spaces thereon and intended disposing of the townhouses and car parking spaces by way of individual conveyances, the first and second defendants agreed to sell and Ronbow Limited agreed to purchase for a nominal consideration of IR£10 “the Estate” and all appurtenances thereto subject to the conveyances of the townhouses and car park spaces thereafter granted to purchasers thereof and other easements, rights and privileges granted or reserved by the first and second defendants over “the Estate”. It was provided that the title should consist of the documents specified in the schedule thereto. The schedule referred to a “Certified copy Booklet of Title Documents”. It was further provided that the completion date should be at least 28 days after the completion of the sale of the last townhouse and car park space to be erected on “the Estate”. The second is a conveyance dated 31st January, 2005 made between the first defendant of the one part and the plaintiff of the other part (the 2005 conveyance). The 2005 conveyance was expressed to be made pursuant to the Management Company Agreement for the nominal consideration of €12.70. The first defendant conveyed and assigned “the Estate”, which was depicted on a map annexed thereto and thereon outlined in red, but excluding houses 1 – 37 inclusive and the car park spaces assured with those houses, to the plaintiff in fee simple subject to and with the benefit of a lease therein referred to and also for the residue unexpired of the term of the lease. The lease referred to was the lease dated the 28th day of August, 1863 made between the Right Honourable Granville Leveson, Earl of Carysfort of the one part and Hugh O’Rorke of the other part (the 1863 lease), which had created a term of 200 years from 27th March, 1907. The conveyance was also expressed to be subject to with the benefit of the rights created in the conveyances of houses 1 – 37 and was also expressed to be subject to certain third party rights in favour of adjoining owners. Having regard to the manner of execution of the 2005 conveyance, it would appear that the directors of the first defendant were also the directors of the plaintiff at the date of the execution thereof. The map on the 2005 conveyance showed “the Estate”, that is to say, Elton Court, outlined in red. Based on the 2003 Ordnance Survey map it showed Elton Court as developed and the location of the 37 houses and car parking spaces. Effectively what was conveyed to the plaintiff was the unsold land within Elton Court, namely, the common areas including the accesses from the public road. Two accesses are depicted, one from Breffni Road and the other from Castlepark Road. Obviously, subsequent to the 2005 conveyance, the owners of houses in Elton Court took over the management company. At an extraordinary general meeting of the plaintiff held on 19th March, 2008 the company resolved by a majority of its members to commence legal proceedings against the first defendant and the third to twenty second defendants “in relation to defective title to the common grounds of Elton Court”. These proceedings, which had been commenced by plenary summons which had issued on 28th March, 2007, were served subsequent to that resolution on the third to twenty second defendants, who are the applicants on this application. The current status of these proceedings vis-à-vis the various defendants is as follows:
(2) The applicants, who are the members of the firm of Beauchamps, Solicitors, who acted for the first and second defendants in the sales of the houses in Elton Court were served with these proceedings on 26th March, 2008 and a statement of claim has been delivered to them. (3) The twenty third defendant was the architect retained on behalf of the first and second defendants to furnish a statutory declaration of identity for the benefit of the purchasers of the 37 houses in Elton Court. The statutory declaration was dated 1st May, 2001. Although named as a party to these proceedings, the proceedings have not been served on the twenty third defendant. However, the proceedings against him have not been discontinued. (4) The twenty fourth defendant is a solicitor who formerly acted for plaintiff in connection with matters concerning Elton Court. While he has been named as a defendant, the proceedings have not been served on him. As I understand it, notice of discontinuance has not been served in relation to his participation.
The application
The claim against the applicants in the proceedings
8. The [applicants] owed a duty of care to the Plaintiff Management Company. They owed a duty in the scheme of title they assembled and presented, both a Solicitor own client duty and a duty arising out of the particular circumstances, viz., by the time of the [2005 conveyance], all and/or virtually all of the 37 houses had been bought, paid for and occupied. 9. The [2005 conveyance] ought to have been a formality complying with the planning permission and Management Company Agreement for the Estate. What occurred was in effect, a defective title delivered to the Plaintiff Management Company. 10. The ‘title’ to the laneways at Elton Court actually granted to the Management Company was defective – it is and was not a title ‘in possession’, causing foreseeable loss, damage, inconvenience and expense to the Plaintiff. Car parking, activities and blockages in the lanes are uncontrolable (sic) into the future until title is resolved. 11. Dunlaoghaire (sic) Rathdown County Council will not take the roads/lanes/drains into charge. The roads/lanes/drains need finishing and title presents a problem to same. … 12. Another area of title purportedly assured and in [the 2005 conveyance] was not the property of the [first defendant] to convey. This portion is indicated on the map annexed to the Plenary Summons. 13. The Plaintiff was not informed and/or was misinformed by the Defendants of the nature of the interest of Thomas and Philomena Byrne which caused the Plaintiff the loss of and loss of amenity in respect of a laneway car parking space and the litigation in relation thereto in the Circuit Court in 2007 at which representatives of the defendant/defendants attended as witnesses or legal observers.”
(2) damages for negligence and breach of duty and “damages for acting in conflict of interest”; (3) damages for misrepresentation and breach of title warranty. What emerges from the statement of claim is that the basis of the plaintiff’s claim against the applicants is that the applicants, acting as solicitors for the plaintiff, were negligent and in breach of contract in that the title to the common areas in Elton Court, which the plaintiff acquired from the first defendant by virtue of the 2005 conveyance, is defective. It is not possible to identify the area affected by the defect referred to in para. 12, nor is it possible to discern the nature or source of the defects in the title to the common areas which the plaintiff alleges exist from the statement of claim. The replies to a notice for particulars dated 7th November, 2008 served by the applicants, which replies were furnished by the plaintiff’s solicitors with a letter dated 9th February, 2009, throw some light on the alleged defects. In response to queries by the applicants as to the nature of the title defects complained of in paras. 9 and 10 of the statement of claim, the plaintiff’s solicitors responded:
As I understand the position as a result of the information furnished at the hearing of the application, the plaintiff alleges that the title to the common areas at Elton Court furnished to the plaintiff by virtue of the 2005 conveyance is defective in three respects. It is important to emphasise that the title to Elton Court is extremely complicated and what I understand to be the alleged defects will only be outlined in general terms. First, the title created by the 1863 lease in the areas coloured yellow on the Gibbons map is outstanding. Those areas, which are roughly “T” shaped, comprise a laneway which extends from Breffni Road along the rear of houses on Castlepark Road as far as No. 16 Castlepark Road and a laneway which extends from that laneway along the rear of the premises designated Breffni Terrace on the Gibbons map. The title position, as I understand it, is that both laneways were included in the 1863 lease but the first defendant had acquired only the freehold interest in both laneways subject to and with the benefit of the 1863 lease and had not acquired the leasehold interest created by the 1863 lease therein. Accordingly, by virtue of the 2005 conveyance, all the plaintiff acquired was the freehold reversion on the 1863 lease, which will fall into possession just under one hundred years hence. As I understand it, the applicants accept that such was the effect of the 2005 conveyance. Secondly, there is an area coloured yellow and cross-hatched in black on the Gibbons map which extends from Castlepark Road along the side of what was formerly No. 16 Castlepark Road and further west along the rear of houses on Elton Park. On the Gibbons map this area is designated as “Elton Park lane”. As I understand it, what was formerly No. 16 Castlepark Road and the part of this area contiguous with it now forms the entrance into Elton Court from Castlepark Road. The plaintiff’s complaint is that the first defendant had no title whatsoever to this area when it executed the 2005 conveyance. Although, on a superficial comparison of the Gibbons map with the map on the 2005 conveyance, this area would appear to be within the area outlined in red and depicted on the latter map, on a superficial comparison of the Gibbons map and the map on the 1863 lease, it would appear that this area was not comprised in and demised by the 1863 lease. Therefore, for present purposes, I am assuming that the contention of the plaintiff is correct and that the first defendant did not have any title to this area at the date of the 2005 conveyance, because, so far as is relevant, its title, both freehold and leasehold, related to lands comprised in and demised by the 1863 lease. Thirdly, by virtue of an order dated 18th July, 2007 made by Mr. Justice Smyth in the Circuit Court proceedings (Record No. 2005/05698) referred to in the statement of claim, being proceedings between Thomas Byrne and Philomena Byrne, as plaintiffs, and the plaintiff in these proceedings, as defendant, the Court made a declaration to the following effect:
The legal principles applicable to an application for security for costs
The issue of delay was considered recently by the Supreme Court in Hidden Ireland Heritage Holidays Limited v. Indigo Service Limited [2005] 2 IR 115, in which Fennelly J. stated (at p. 122):
The issues
(2) whether the applicants have satisfied the Court that they have a prima facie defence to the plaintiff’s claim; (3) if the answer to the first two questions is in the affirmative, has the plaintiff discharged the onus of satisfying the Court that “special circumstances” exist such that the Court should exercise its discretion not to order security for costs, in particular, on the alleged bases of delay, or the conduct of the applicants, or both,
Credible evidence of inability to pay There is no evidence that the plaintiff has any assets other than the ownership of the common areas of Elton Court which are subject to the rights of the house owners and the third party rights which affect the same, which, as a matter of common sense, has little or no value. Its source of income is the service charge payable by the owners of the 37 houses in Elton Court under the conveyances to the first house owners by the second and third defendants, in which the plaintiff participated. Unfortunately, there is before the Court only a truncated copy of one such conveyance which does not contain the most important element of the conveyance for present purposes, the Fifth Schedule, which sets out the obligations of the management company in respect of which the house owner is obliged to pay a service charge. Therefore, it is not possible to form a view as to whether each house owner would be bound by the covenant to pay the service charge to contribute to the legal costs of proceedings in the High Court of the nature of these proceedings. The applicants have put before the Court a letter from William J. Brennan & Co., Legal Cost Accountants, in which the applicants’ costs of defending the proceedings are estimated in the sum of €97,450 exclusive of VAT. The plaintiff did not take issue with the build up of that estimate, although the Court was asked to consider the figure “in the light of the fact that the case is in reality an assessment only”. The reality is that the applicants seriously contend that they have no liability, so that liability will be an issue. On that basis, the estimate can be accepted as reasonable for present purposes, i.e., for determining whether security should be ordered. Having regard to the evidence which I have outlined above, I have come to the conclusion that there is credible testimony to give rise to reason to believe that the company will be unable to pay the costs of the applicants, if the applicants successfully defend the claim against them. In arriving at that conclusion, I have not been influenced by the undoubtedly complicating factor that other proceedings are pending in this Court, which have been initiated by certain of the house owners against some or all of the defendants in these proceedings and, as I understand it, in some actions, additional defendants, being the solicitors who acted for the house owners in the purchase of their houses in Elton Court. The conclusion is based on the status of the plaintiff as a company limited by guarantee which has a legal persona distinct from its members, and which, on the evidence, does not have the resources out of which it could meet an award of costs in favour of the applicants. However, I think it is important to record that the affidavits filed on behalf of the plaintiff and the submissions made by counsel for the plaintiff did not give the impression that the house owners, as members of the plaintiff, are hiding behind limited liability and would not contribute with a view to meeting an order for security for costs.
Prima facie defence? First, as regards the outstanding leasehold interest created by the 1863 lease in the laneways coloured yellow on the Gibbons map, the position of the applicants is that the title which the first and second defendants had to “the Estate” and which they were in a position to transfer to the plaintiff in accordance with the Management Company Agreement was clear from the documentation furnished to the purchasers of the houses and their solicitors. It was a matter for the purchasers’ solicitors to satisfy themselves as to the adequacy of the title of the first and second defendants to the laneways and the title the plaintiff would obtain from them. The applicants’ only responsibility was to ensure that that title was transferred to the plaintiff. That was done and the position is that the plaintiff got the title which the purchasers of houses had bargained for. Secondly, in relation to the title to the area coloured yellow and cross-hatched in black on the Gibbons map, the position adopted by the applicants is that their clients, the first and second defendants, retained an architect, the twenty third defendant, to advise and satisfy the purchasers that “the Estate” was within the area to which the first and second defendants had title. They rely on the statutory declaration of identity sworn on 1st May, 2001 by the twenty third defendant in which, after listing 18 title documents in relation to “the Estate” and declaring that, where there were maps annexed to the title documents he had inspected them, he declared as follows:
Turning to the more fundamental issue arising from the fact that the plaintiff is suing the applicants for professional negligence in connection with the title to “the Estate” in the circumstances which prevail here – the difficult and, perhaps, novel, issue as to the extent of the duty of care owed by the applicants to the plaintiff – counsel for the applicants did not contend that no duty of care was owed to the plaintiff. He contended that their duty of care did not extend beyond ensuring that the plaintiff got the title to the common areas which the first and second defendants had contracted to give in implementing the scheme of disposal and that it was a matter for the purchasers’ solicitors to advise the purchasers on the adequacy of that title. He also contended that the applicants were entitled to rely on the appropriate professional advice furnished by the twenty third defendant in dealing with the issue of title identity. That last point, it seems to me, goes more to the standard of care owed by the applicants, rather than the question of the extent of the duty of care they owed. In the affidavits filed on behalf of the plaintiff and in the submissions made by counsel for the plaintiff it was asserted that the applicants have no defence to the plaintiff’s claim and it was further asserted, as I have indicated, that the action will involve only an “assessment”. That is not the case. The applicants are strongly contesting liability and the plaintiff has to face up to that. In my view, the applicants have discharged the onus on them of satisfying the Court that they have a prima facie defence, which is all they have to do. Delay as a special circumstance Having regard to the foregoing chronology, I am absolutely satisfied that there was not delay on the part of the applicants in bringing the application under s. 390, which would justify refusing an order for security for costs.
Conduct of the applicants as a special circumstance It was alleged that the applicants were aggressive in the procurement of an insurance indemnity bond in respect of the defects in title and in attempting to force it on the plaintiff. It was also admitted that the applicants were aggressive in seeking to resolve the difficulties by having the accesses to and within Elton Court taken in charge by the local authority, Dun Laoghaire Rathdown County Council. Very serious allegations of professional negligence have been made by the plaintiff against the applicants in this case. Whether the applicants are contesting liability or not, it is understandable, and it makes good sense, that they should explore whatever avenues are available to remedy the title difficulties which have been exposed. I do not see the actions taken by the applicants with a view to remedying the defects in title as conduct which should militate against them obtaining an order under s. 390. In his first replying affidavit, sworn on 27th July, 2009, the plaintiff’s solicitor, Mr. Paul O’Sullivan, averred that the applicants are the persons “with the greatest liability legally, professionally and morally herein” and that they have taken the most aggressive stance. There followed an averment that the particulars raised “were so prolix and repetitive as to be almost an abuse of pleadings”. That averment, in my view, is wholly unjustified. The extract from the statement of claim which I have quoted above and the response to the request for particulars in relation to the defects in title bear that out. There were also allegations of something akin to dishonesty on the part of the applicants in that affidavit. For instance, it was averred that “it may well emerge in the trial that [the applicants] concealed the defect once they knew it”. In relation to the allegation that there is no title to the area coloured yellow and cross-hatched in black on Mr. Gibbons map, Mr. O’Sullivan averred: “A line on a deed map was removed by someone”. Whoever it is aimed at, that is a preposterous statement. As I have stated, on a superficial comparison, the boundary between “the Estate” and the rear of the houses on Elton Park as shown on the map on the 2005 conveyance does not appear to be consistent with the corresponding boundary on the map on the lease of 1863. The source of the inconsistency cannot be identified on the basis of the documentation before the Court. In all probability, it is a genuine mapping error, if it is an error.
Order As to the amount of the security and the manner in which it is to be provided, unless the parties indicate otherwise, the matter will be referred to the Master for determination.
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